Like many of its 33 employees, for more than 27 years Employ+Ability Inc. has been defying the odds.
As with many American manufacturers, this small original equipment maker in Braintree, Mass., faced the brink when competition from China began prying away business in 2004. The company, which primarily makes hot and cold packs for companies like Covidien (NYSE:COV), Johnson & Johnson (NYSE:JNJ) and Inverness Medical Innovations (NYSE:IMA), lost a $10 million contract to the Far East and the future looked a little grim.
But Employ+Ability has never been just another company. Founded in 1981to help create competitive employment opportunities for people with disabilities, more than two-thirds of its staff are mentally disabled, hearing impaired or blind. The company’s commitment to its mission and the quality of its workers has not only attracted high-profile medical device firms as customers; executives from device makers also serve on Employ+Ability’s board.
“We have employees who have had perfect attendance records for years and who walk for miles in the snow and zero-degree weather just to go to work,” says Lisa Lopez, a senior vice president at Haemonetics Corp. (NYSE:HAE), who’s been a member of the Employ+Ability board for many years. “The degree to which these employees are so dedicated to one another and their responsibility to the company, it’s is so ennobling to witness that type of dedication.”
That dedication has always been a rallying cry for Lopez and the rest of the board, which includes medical device heavyweights such as Covidien CEO Richard Meelia and chairman emeritus John White, the former CEO of Haemonetics Corp. Former board members include Donald Pogorzelski, president of Genzyme Diagnostics; Thomas Reilly, the founder of Fernwood Investment Management; and Hill Holliday CEO Michael Sheehan.
That star power has helped keep the company viable through tough economic times. The board initiated a merger late in 2008 with Triangle Inc., making Employ+Ability a division of that Malden-based company, which empowers people with disabilities to enjoy rich, fulfilling lives.
And now they’re on a mission to raise money to re-hire employees who were laid off when the company hit a rough patch.
Work is good
There are many adults with disabilities who want to work but can’t, due to a lack of appropriate job openings. According to statistics cited on Employ+Ability’s website, more than two-thirds of the 54 million Americans with disabilities have the desire and ability to work, yet only 32 per cent of people with disabilities ages 18-64 work full- or part-time.
Although Employ+Ability is a non-profit organization, business development director Jim Kane says it’s no charity case. The firm pulled in nearly $4 million in 2008, about $3.5 million of that from sales of its various lines of first aid kits and reusable cold and gel packs.
The rest of the firm’s income is raised through corporate sponsorships and charitable donations, mostly ginned up from its board and their vast reach into corporate sectors. The board also serves in a business development capacity; for example, Covidien sends the company about $500,000 in business from its U.S. Surgical division in Norwalk, Conn.
The business model stretches back to John White’s tenure as chairman. White, the CEO of Haemonetics from 1985 to 1998, employed disabled workers at the company’s Braintree headquarters through a program called Work Inc. Impressed by the dedication of the workers he saw, White felt that there should be an alternative business model where disabled workers could earn real market wages, benefits and even build careers. Using his pull in the community, White managed to draw many of the area’s medical device manufacturers to commit to using Employ+Ability.
For the most part that model has held true, Kane says.
“A lot of [employees] have been here for 20 years. They are very conscientious. They don’t want anything to come back on them, because that would reflect on their disability,” he says. “They’re more conscientious than most people, in terms of what they do.”
Kane points to the collective discipline and work ethic of his staff as the keys to their success.
“We have guys who can sit there and rivet 5,000 devices together a day, while what some might call a fully functional person wouldn’t be able to sit there all day and do that. They’re very focused and want things to be right,” he explains.
But there are a few misperceptions about Employ+Ability’s workers that Kane and his staff try to be aware of and, if necessary, clarify.
“Because we have people with disabilities, [some believe that] our products are of lesser quality. But exactly the opposite is true,” he notes. “Our people don’t want anything to reflect on them [because of] their disability. So every little thing they see — like if the printing isn’t right or a seal on an ice pack has a wrinkle on it — they catch that, where most people would not.”
Merging with Triangle
When Employ+Ability merged in December, 2008, with Triangle Inc., the firm was struggling. Revenues had dropped dramatically over the course of the decade, falling from more than $14 million in fiscal 2001 to just $3.5 million in fiscal 2008.
“As business changed and competition came from offshore, [our business plan] wasn’t going to be viable for the long term,” Kane says. “China can land them here at half of our costs. So we weren’t competitive and had also lost a big chunk of business from a big customer. The bigger medical distributors had all gone to China, so we had to change and adapt.”
Triangle CEO Michael Rodrigues met with then-president Jim Middleton and other company officials in the spring of 2008. The parties realized how much each company had in common and, soon thereafter, Rodrigues took a tour of the Braintree firm’s plant.
“They were facing a lot of the issues we had faced here, when I arrived in July of 2001,” Rodrigues recalls. “We were then in a financially precarious place. Our enterprises were similar to Employ+Ability’s, in that they were great concepts that weren’t being executed to their highest possible levels. The whole model had to be re-thought and updated.”
Each company did the necessary research and due diligence, which included their boards getting together and providing feedback. In addition, employees of each company visited the other’s facilities to gauge the comfort level of a possible union.
“Just connecting the two cultures was important, because there are some differences,” Rodrigues notes. “The main one being that the businesses Triangle runs are a vehicle for people to progress into community employment. But Employ+Ability is actually an endpoint, a career choice for people with disabilities. They compete for jobs there and choose to stay there, rather than go somewhere else.”
Despite the differences, all involved soon realized that a partnership would benefit both groups. The merger was consummated in December of 2008.
Lopez said the merger was important simply for the reason that the mission of Employ+Ability was to continue to keep these people working. The merger provided stability and much-needed product diversification.
In the year since the merger, Kane says, he and the company have already seen benefits. For one thing, rather than viewing competition from China as a potential threat, Employ+Ability has recently begun importing items from there and will look to expand on that.
“The merger opened up new possibilities for us,” he says. “Triangle has a products business where they import and broker things out of China for retail sales. We were looking into a similar thing three or four years ago, but our board wasn’t open to it. So with the merger we have the opportunity to do that.”
Earlier this year, Kane made his first trip to China to meet with vendors and returned with enthusiastic reports.
“We’re going to bring in products from China we can’t make here that fit into our space and that we can offer to our distributors,” Kane says. “We’ve just ordered our first array of Chinese products. These are things we can’t make but are similar to the ice packs, such as infant heel warmers.”
Kane hopes to attract medical product distributors or contract manufacturers, large or small, who may have a need to source product in China or may want Employ+Ability to bring products to the U.S. for assembly.
“We can bring products in, package them and do private labeling for them,” he says. “We do quite a bit of private-label products now on a small scale. We can do product runs as small as 500 or a thousand pieces.”
A new mission
There is still unfinished business to be had, according to Lopez.
“The merger was very positive, but it’s still a fragile time,” she says, pointing out that Triangle receives a large amount of its funding from the cash-strapped Commonwealth of Massachusetts, which has been forced to make drastic budget cuts. It’s still up to the company’s supporters and board members to come through.
The latest mission, Lopez says, is raising funds to bring back workers who were laid off during the company’s financial troubles. The board hopes they will be able to bring them back within a year, she says.
